Opportunities and Challenges of Cuba's Solar Market

The Cuban solar market is undergoing rapid transformation driven by both policy promotion and energy crisis. Its policy framework is centered on energy sovereignty, and international cooperation has become a key support, but US sanctions and infrastructure shortcomings pose major challenges. The following analysis is carried out from three dimensions: policy system, opportunities and challenges:

1. Top-level Design And Goal Planning

National energy strategy: The National Power System Restoration Plan issued in December 2024 clearly stated that 92 photovoltaic parks with a total installed capacity of more than 2,000 megawatts will be built by 2028, of which 55 projects will be launched in 2025. The plan puts solar energy at the core of energy transformation, with the goal of increasing the proportion of renewable energy from 4% to 24% by 2030.

Mandatory policy: A new decree issued in November 2024 requires public and private enterprises to increase the proportion of renewable energy use to 50% within three years, otherwise they must connect to government-built photovoltaic facilities. This policy directly promotes the penetration of photovoltaics in the industrial and commercial sectors.

2. Incentives And Foreign Investment Opening

Tariff and tax incentives: Decree No. 345 of 2019 allows distributed photovoltaic projects to enjoy import tariff exemptions, equipment import tax rate reduced from 40% to 20%, and provides peso loans of 100% of the equipment value. Surplus electricity from non-residential projects can be sold at US$0.06/kWh.

Foreign investment access: Foreign investment can participate in the form of joint ventures (no more than 50% of the shares) or wholly-owned, but must be approved by the Executive Committee of the Council of Ministers. Key areas include photovoltaic manufacturing and large-scale power stations. Chinese companies lead projects through the "Belt and Road" framework, such as a 12 MW photovoltaic power station delivered in 2024 and a 35 MW project launched in 2025.

3. International Cooperation And Financial Support

Chinese aid: China has provided Cuba with 47 MW of photovoltaic power stations, covering 25,000 households, and plans to add 1,000 MW of cooperative projects. The 35 MW project, which will be delivered in March 2025, will save 18,000 tons of fuel per year.

Russian cooperation: Russia plans to invest 700 million euros to transform Cuba's thermal power plants and explore nuclear energy cooperation, but progress is slow due to its own economic constraints.

1. Power Gap And Livelihood Needs

Supply shortage: Cuba's electricity production only meets 60%-70% of demand. In October 2024, there were four power outages across the country, and some areas were out of power for more than 72 hours. Solar energy has become a core means to alleviate power shortages. For example, the 12 MW project assisted by China generates 60,000 kWh of electricity per day, covering 25,000 households.

Rural electrification: Cuba has installed 300-watt photovoltaic systems for 8,000 households in remote areas through the "Photovoltaic Family Plan", and users only need to pay 10 pesos (about 0.4 US dollars) per month.

2. Tourism And Industrial Potential

Tourism transformation: Cuba's tourism industry accounts for 11% of GDP, but hotels rely on diesel power generation, which costs up to $0.3/kWh. Chinese companies are working with Cuba to develop hotel photovoltaic projects, such as the 10 MW project in the Varadero resort.

Industrial and commercial applications: A new decree in 2024 requires companies to use 50% renewable energy, driving demand for industrial and commercial photovoltaics. The 2.2 kW household system in Sancti Spiritus Province can be connected to a refrigerator and washing machine, with a monthly fee of only 10 pesos.

3. Technical Adaptation And Cost Advantages

Resource endowment: Cuba has an average annual sunshine of 5.5-6.5 hours, and the horizontal irradiance reaches 1800-2000kWh/m², which is suitable for centralized and distributed photovoltaics.

Cost competitiveness: Chinese components are re-exported to Cuba through Southeast Asia, and the price is 30% lower than that in the United States. For example, the terminal price of 182mm monofacial PERC modules in Cuba is about US$0.7/W, which is US$0.2/W lower than that in the United States.

1. Multi-dimensional Strikes Of US Sanctions

Equipment Import Restrictions: The United States imposes tariffs of up to 271% on Southeast Asian photovoltaic products, resulting in higher costs for Cuba to import modules from Vietnam and Malaysia. In March 2025, the United States further raised tariffs on Chinese photovoltaic companies in Vietnam to 363.84%, exacerbating supply chain risks.

Financing Channel Blockade: Cuba is included in the list of "State Sponsors of Terrorism" and cannot obtain loans from international financial institutions. The Cuban Power System Restoration Plan in 2024 requires US$1 billion in funds, but only 30% has been implemented.

2. Shortcomings In Technology And Talent

Equipment Dependence on Imports: The localization rate of Cuban photovoltaic modules is less than 5%, and core equipment depends on imports. In 2024, 40% of photovoltaic equipment in the Santiago area was paralyzed due to battery failure and required Chinese assistance for replacement.

Shortage of technical talents: Cuba has only 2,000 photovoltaic practitioners, lacking system design and operation and maintenance capabilities. The University of Sancti Spiritus cooperates with power companies to train technical personnel, but the project is progressing slowly.

3. Power Grid And Energy Storage Bottlenecks

Poor grid stability: Cuba's power grid was built in the 1980s, with a transmission loss rate of 15% and a lack of intelligent dispatching system. It plans to build a new 200 MW energy storage facility in 2025, but the funds have not yet been implemented.

Insufficient grid connection capacity: Cuba's photovoltaic installed capacity will exceed 300 MW in 2024, but only 254 MW will be connected to the grid, and the rest will be idle due to grid restrictions.

1. Short-term path

Accelerate the implementation of Chinese-funded projects: China plans to deliver 35 MW of projects in 2025 and promote 1,000 MW of cooperation, which may adopt the "equipment for medical services" model (such as Cuba exporting medicines to China).

Exploring regional cooperation: Cuba negotiates with Mexico and Venezuela to exchange oil for photovoltaic equipment, such as Mexico providing Cuba with 400,000 barrels of crude oil in 2024 in exchange for photovoltaic technology support.

2. Long-term transformation

Technology localization: Cuba plans to build a photovoltaic module factory in the Mariel Special Economic Zone, with a goal of 500 megawatts of production capacity in 2026, but it needs to break through the US technology blockade.

Policy optimization: Referring to India's "Prime Minister's Photovoltaic Family Plan", Cuba may introduce higher subsidies, such as increasing the price of distributed photovoltaic electricity from US$0.06/kWh to US$0.1/kWh.

3. Risk warning

Sanctions escalation: If the United States includes Cuba in Article 3 of the Helms-Burton Act, it may freeze the assets of Chinese-funded projects and require investment through a third party (such as the UAE).

Debt risk: Cuba's foreign debt has reached US$12 billion, and photovoltaic projects need to adopt the BOT model to reduce fiscal pressure.

The Cuban solar market is a mixture of policy-driven and crisis-driven, with the core contradiction being the confrontation between energy security needs and external sanctions. In the short term, the Chinese-led "equipment + capital" aid model will dominate the market; in the long term, it will need to break through the bottlenecks of technology localization and grid upgrades. Investors should focus on Chinese-funded cooperation projects, while being wary of sanctions risks and policy fluctuations.